In this blog post we discussed about Google’s antitrust agreement with states permits additional app payment alternatives.
The tech behemoth hopes that by paying $700 million in settlement, it would assist address other legal challenges and permit app developers to receive payments directly from users.
In a bid to manage growing regulatory scrutiny of its influence, Google announced on Monday that it will permit developers on its Play app store to provide consumers with direct payment choices and that it would pay $700 million to resolve an antitrust lawsuit filed by state attorneys general.
The lawsuit, filed in July 2021, charged Google’s app store with abusing its dominant position in the industry and imposing harsh conditions on software providers. The IT behemoth is being sued for antitrust in a number of US courts, including one where the federal government is suing Google for allegedly abusing its monopoly on internet search.
Google said on Monday that it will now permit apps to charge users directly instead of via Google. The business will put $630 million into a consumer settlement fund and contribute $70 million to a state-use fund. Google reiterated that phone manufacturers using the Android mobile operating system, such as Samsung, can continue to install multiple app shops on their devices in addition to Google’s Play Store, in order to emphasize the choice that customers have in how they download apps.
Although no specifics were disclosed, the settlement was declared in September.
According to a person familiar with the situation, Google believes that the settlement will serve as a model for agreements with other parties that have objected to its Play Store standards. One such party is Epic Games, the company behind the well-known video game Fortnite, which last week successfully sued Google for antitrust violations. Wilson White, Google’s vice president of government affairs, stated in a blog post that “this settlement builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other OS makers and invest in the Android ecosystem for users and developers.”
With regard to its app store, which has been the subject of heightened regulatory scrutiny in recent years due to allegations of monopolistic practices, the deal represents Google’s most recent surrender. Because it is one of the two major markets for mobile apps, along with Apple’s App Store, the Google Play Store has garnered criticism. Google charges app developers up to 30% for purchases made within well-known apps that are downloaded from the store, and 15% for payments made by users for app subscriptions.
A law imposed by the South Korean government in 2021 requires Google and Apple to permit app developers to charge users directly. Google has since provided several payment methods around the nation. Additionally, before the settlement was finalized, it preemptively launched a test program that gave consumers a choice in how they were billed in the US.
When app developers manage their own transactions, the settlement will lower those fees by 4 percentage points; however, users may not notice a decrease in fees because app developers may keep the savings for themselves. Additionally, it will let developers present various price alternatives to customers at the time of purchase.
Google reached a settlement with the government that included the attorneys general of all fifty states, the District of Columbia, and Puerto Rico. In the event that the lawsuit reached trial, the states would have presented their case in a joint trial with cases brought by Match Group, a dating app company, and Epic, who had sued on comparable grounds.
But two months before the trial began, in September, Google and the attorneys general declared that they had struck a “agreement in principle.” The September settlement terms could not be made public until one week following the Epic ruling.
Google and Match also reached a settlement in October.
Epic proceeded to prevail in its case last week, persuading a nine-member federal jury in San Francisco that Google’s fees and demanding conditions for developers constituted antitrust breaches, harming the gaming company’s chances of making money. Next year, U.S. District Court for the Northern District of California Judge James Donato will determine whether remedies are required to rectify Google’s behavior.
Google announced that it will file an appeal of the Epic trial’s decision. Google’s attorneys contended that the business could not operate as a monopoly due to competition from Apple’s iOS software and App Store, which has far greater popularity in the US, and Google’s Android mobile operating system and Play Store.
A judge ruled in favor of Apple in a comparable case that Epic filed; nevertheless, the matter may be taken up by the US Supreme Court in the upcoming year.
